NEWS ROUND UP Wednesday, December 19, 2018 Contents GDP growth slumps to 2.9% in 3Q ....................................................................................................... 2 UNP backs abolishing Executive Presidency.......................................................................................... 3 China welcomes peaceful resolution of political crisis ........................................................................... 4 MR appointed as Opposition leader despite protests............................................................................ 4 Trump's barbs cast shadow over Fed meeting ...................................................................................... 5 Sri Lanka stocks down, foreign selling in JKH ........................................................................................ 6 Sri Lanka's PickMe mulls financial services ........................................................................................... 7 Taprobane Securities (Pvt) Ltd – Research + 94 11 5328200 [email protected] GDP growth slumps to 2.9% in 3Q The country’s economic growth in the third quarter had slumped to a historic low of 2.9% in the third quarter in comparison to 3.2% a year earlier reaffirming the continuous struggle. The 3Q growth was lower in comparison to 3.7% achieved in the 2Q. Agricultural activities expanded favourably by 3.3% compared to the contraction of 3.0% reported in the third quarter of 2017. The Industrial activities recorded positive growth rate of 1.9%, sharply down from 5.3% a year earlier and Service activities expanded further by 3.9% up from 2.8% a year ago. The four major components of the economy viz. Agriculture, Industry, Services and Taxes less subsidies on products have contributed their shares to the GDP at current price by 7.5%, 27.4%, 56.8% and 8.3% respectively. The Department of Census and Statistics said among the sub activities of Agriculture, the ‘Growing of Rice’ which recorded 32.8% of negative growth rate in the third quarter of year 2017, has reported striking positive growth rate of 46.9% during this quarter. In addition, ‘Growing of Oleaginous fruits including coconut’, ‘Growing of Cereals’, ‘Growing of Vegetables’, ‘Growing of Rubber’, ‘Animal production’, ‘Growing of fruits’ and ‘Growing of Spices’ have expanded substantially by 11.9%, 10.6%, 9.9%, 5.2%, 5.1%, 4.0% and 3.1% respectively. The sub activities of ‘Fresh water fishing’ and ‘Growing ofTea’ have recorded a substantial decline by 19.1% and 14.9% respectively in this quarter. The ‘Industrial activities’, which shared the GOP by 27.4% at current price, has continued to expand further at a rate of 1.9%. The overall manufacturing activities have grown by 2.2% during the third quarter of 2018, supported mainly by the sub activities of ‘Manufacture of food, beverages and tobacco ‘ and ‘Manufacture of textile and wearing apparels’, which recorded positive growth rates of 3.7% and 3.2% respectively during this period. In addition, ‘Manufacture of coke and refined petroleum products’ and ‘Manufacture of other non-metallic mineral products’ have reported significant positive growth rates of 16.7% and 3.9% respectively. However, ‘Manufacture of wood and products of woods’ and ‘Manufacture of paper products’ activities reported negative growth rate of 13.1% and 7.5% during this quarter.Among the ‘Industrial activities’, ‘Electricity, gas, steam and air conditioning supply’ and ‘Water collection, treatment and supply ‘ have recorded 3.3% and 5.0% of positive growth rates respectively , while ‘Mining and quarrying’ has declined by 2.2%. The ‘Construction’ activity, which corresponds to the second highest share (7.0%) within the industry sector, grew by rate of 2.5% during this quarter when compared to the third quarter of2017. Among the three major activities, the Services activities, which gave the highest contribution (56.8%) to the GDP, has grown by 3.9% during the third quarter of2018, when compared to the same quarter in the year 2017. Performance of the service activities were strengthened by the sub activities of ‘Telecommunication services’, ‘Financial services’, ‘Insurance services’, ‘Information Technology services’, ‘Human health activities’, ‘Accommodation, food and beverage services’, ‘Wholesale and retail trade’ and ‘ Other personal services’ expanded by 14.8%, 12.4%, 8.3%, 7.5%, 5.7%, 5.4%, 5.0% and 4.8% respectively compared to the third quarter of 2017. The activity of ‘Programming and broadcasting’ and ‘Transportation’ activities contracted substantially by 9.0% and 0.7% within this quarter compared to the respective quarter in 2017. DCS states that economic growth rate of the country is estimated as 2.9% for the third quarter of 2018. The Gross Domestic Product at constant (2010) prices for the third quarter of2018 recorded as Rs. 2,431,627 million and GDP reported for third quarter of2017 was Rs. 2,362,698 million. (Daily FT) Taprobane Securities (Pvt) Ltd – Research + 94 11 5328200 [email protected] UNP backs abolishing Executive Presidency United National Party (UNP), which created the Executive Presidency in 1978, yesterday endorsed the fact that concentrating so much power in one single office is dangerous for democracy and the country at large. Assuring the nation that all efforts will be taken to further dilute the executive powers of the President and abolish the Executive Presidency, a task which began with the 19th Amendment to the Constitution, which proved its importance during the constitutional crisis. UNP lawmaker Malik Samarawickrama, explaining the UNP’s official position, held that the Executive Presidency does not lead to a stronger State, it does not strengthen the unitary State of the country, nor will it lead to a more stable Government. “We must bring priority to this Parliament, the elected representatives of the people. It is clearly apparent from this crisis that the Executive Presidency is posing a serious threat. All of us members of this Legislature need to double down and commit to abolish the Executive Presidency. We commenced through this path through the 19th Amendment, which drained the absolute powers of the Executive and brought more power to Parliament. Form the last 51 days, you can see how vital this Amendment was. Now it is time to complete the job abolishing the Executive Presidency,” said MP Samarawickrama. According to MP Samarawickrama, abolishing Executive Presidency was a corner stone of the Yahapalanaya Government’s plan, which was guided by the late Ven. Maduluwawe Sobhitha Thero, and the time has come to recommit to that goal. “It is safe to say that it has never been clearer why we need to abolish the system of Executive Presidency. The events of the last 51 days, in our country should leave us in no doubt that the concentration of power in one office is a recipe for disaster,” he said. After having seen the ill effects of the Executive Presidency, the lawmaker held that the UNP cannot turn a blind eye but act without a delay. “We have seen how this august House, the parliamentary branch of the Government, functions to uphold democracy and due process. Despite the high-handed act of the Executive, we have seen how this Speaker courageously upheld due process. We have seen how the Judiciary upheld the supreme law of the land; our Constitution amidst the attack by the Executive,” said MP Samarawickrama. Highlighting the danger in concentrating power on one office, MP Samarawickrama held that Sri Lanka will be democratically strong if a meaningful distribution of power between the three branches of Presidency, Parliament and Judiciary is met. “It is about making sure that one person doesn’t wield all the authority. And as we saw during the last 51 days, that held the country hostage. The Executive President must go. The argument that has been put forward for a while is that a strong State requires a strong Executive President. But look at the last 5 days. What kept this State strong was its Legislature and the Speaker. And the strong and independent Judiciary, but not the Executive. In fact, the actions of the Presidency weakened not strengthened it. Weakened it economically and weakened in the international community,” added MP Samarawickrama. Taprobane Securities (Pvt) Ltd – Research + 94 11 5328200 [email protected] China welcomes peaceful resolution of political crisis China yesterday welcomed the peaceful resolution of the political crisis in Sri Lanka. “As a traditional close neighbour and a most important development partner, China welcomes the peaceful and proper resolution of recent political situation in Sri Lanka by all related parties,” Embassy of the People’s Republic of China in Sri Lanka said in a statement. “China believes the Sri Lankan Government, political parties and the people have the ability and wisdom to manage well its domestic affairs, and maintain the country’s stability and development. China remains committed to enhancing its friendly exchanges with the Sri Lankan Government and all political parties, promoting the pragmatic cooperation between the two countries, and bringing benefits to the two peoples,” it added. (Daily FT) MR appointed as Opposition leader despite protests Speaker Karu Jayasuriya nominated MP Mahinda Rajapaksa as the Leader of the Opposition soon after Parliament convened yesterday, but responding to protests from Parliamentarians, said he would decide whether to appoint a Select Committee to look into the validity of the appointment. MP Mahinda Rajapaksa Filling